The saturation magnetization, 4πMs, and the magnetostriction constant, λs, of Ni81Fe19, Ni81Fe19/Ta, and Ni72Fe17Rh11/Ta thin films were studied as a function of film thickness before and after annealing at 250 °C in vacuum for 2 h. For films of thickness t<200 Å, 4πMs and λs were found to be strongly dependent on film thickness with an even larger variation after annealing. For all films, at t=60Å, 4πMs decreases by 20%-30% compared to bulk value. The value of λs is in the range of 10-6 for all films and shows a complex behavior, including a change of sign, depending on film composition as well as Ta capping. Auger depth profiling of uncapped films has shown the presence of an Fe-rich surface oxide layer whose composition changed and thickness increased after annealing. The composition and thickness of the Ta-film interface layer in the Ta-capped films did not change with annealing. The presence of such layers, at the film surface, Ta-film interface, and film-substrate interface, of different composition and magnetic properties from the film bulk, can explain the observed behavior of 4πMs and λs.